It didn't win the Oscar in Hollywood, but the Israeli film "Waltz with Bashir," which had been favored to take the best foreign-language film award, has certainly triumphed in Lebanon.

The animated antiwar feature has become an underground hit – no small feat for a film that is not only banned here but was made in an enemy state. Lebanon and Israel are in a state of war and contacts with the Jewish state are forbidden.

"It is one of the most popular DVDs we have," says the owner of a DVD rental store in Haret Hreik, a southern Beirut district and a stronghold of the militant Shiite Hezbollah.

"Waltz with Bashir" tells the story of a former Israeli soldier struggling to recall his repressed memories of Israel's 1982 invasion of Lebanon. It ends with the bloody massacre of Palestinians in the Sabra/Shatila refugee camp by Israeli-allied Christian militiamen. No one knows exactly how many people died during the three-day killing spree – estimates vary between 400 and more than 2,000.

Israeli troops were guarding the entrances of the camp at the time and also lit up the night sky with flares – the movie's haunting leitmotif – which allowed the militiamen to continue slaughtering the residents during the night. The final scenes morph from the comic book images of Palestinian women wailing in grief to shocking video footage of the actual victims of the massacre.

Few residents of Sabra/Shatila have seen "Waltz with Bashir" yet, but the movie has sparked curiosity due to its sympathetic portrayal of the Palestinian victims of the massacre.

"Of course I want to see it. I feel as though I have a duty to watch this movie," says Nawal Abu Rudeina, who was 6 years old at the time of the massacre.

Ms. Abu Rudeina's father, uncle, and cousin were taken from their home by Christian gunmen, lined up against a wall, and shot dead.

Ari Folman, the director, served with the Israeli army in Lebanon in 1982 and it was his unit that fired the flares that illuminated Sabra/Shatila. "Waltz with Bashir" depicts Mr. Folman's personal struggle to come to terms with his experiences from 26 years ago in Lebanon. The movie won the Palme D'Or at the Cannes Film Festival, then received a Golden Globe award, and was the favorite for the foreign film Academy Award. It lost out to the Japanese film "Departures."

Last month, Monika Borgmann, a German journalist, and her Lebanese husband, Lokman Slim, defied Lebanon's censorship laws and held a private screening of "Waltz with Bashir." Such was the interest in the movie, the turnout for the screening was three times larger than expected. "The Israelis and the Lebanese share a painful history," Ms. Borgmann says. "There is a mutual fascination because of these shared chapters [in history] and also because direct contact is forbidden."

The Lebanese government turned a blind eye to the screening. Tareq Mitri, the information minister, conceded that while it was illegal to import and show the movie in Lebanon, the current censorship law "was absurd."

"We need to abolish that law so that we can see films like this and any other films and then, if you abolish the censorship law we have, then whoever is harmed can take the matter to court," he says.

Although Lebanon has one of the most open societies in the Arab world, relations with Israel, in any form, remain sensitive, due to the legacy of war and occupation. But some Lebanese say the censorship laws lack common sense.

"You can read Israeli newspapers on the Web, see Israeli politicians interviewed on Al Arabiya, and buy [former Israeli Prime Minister] Ariel Sharon's autobiography in Beirut bookshops. But you can't show a film like 'Waltz with Bashir,' " says Mr. Slim.

Since the end of Lebanon's 16-year civil war in 1990, there has been little collective effort to come to terms with a conflict in which some 120,000 people perished and another 17,000 are still unaccounted for. In the early 1990s, the Lebanese government effectively shut the door on the preceding two decades by declaring immunity for all crimes committed during the war. That ruling permitted former warlords and militia bosses to freely enter postwar politics, acquiring seats in government while public discussions of their war-time deeds were taboo.

"Lebanon fits the classic example where the one-time [criminal] perpetrators become the rulers of the country. They have no real interest in uncovering what happened in the war and investigating their own crimes," says Ousama Safa, director of the Lebanese Center for Policy Studies in Beirut.

Borgmann and Slim are the founders of Umam, an organization that seeks to encourage the Lebanese to confront and accept their violent past. "It is never too late, and each country has to find its own way to deal with the past. No country can escape this process," Borgmann says.